Stocks versus bonds? U.S. equities win easily: Siegel

NEW YORK (Reuters) - If you're still torn about whether or not stocks are a buy, market historian Jeremy Siegel says to measure them against other asset classes, particularly U.S. Treasury securities.

"No question, there should be a strong bias in favor of equities," Seigel told a group of independent wealth managers in New York on Tuesday.

"It's not that I haven't seen the stock market cheaper ... it's that there is no competition from Treasuries," said Siegel, a noted professor at the University of Pennsylvania's Wharton School.

Figures back Siegel's argument. As of Friday, the S&P 500 index was sporting a price-to-earnings ratio of 15 times this year's estimated operating earnings and 21.8 times estimated reported earnings, respectively, Siegel said.

The index's operating earnings yield, a tool for comparing equity valuations with bonds, is 4.6 percent, topping the 3.9 percent yield on the 10-year U.S. Treasury note and matching the 30-year bond's yield.

When forecasts for 2009 reported earnings are used, the S&P's earnings yield stands out at 8.1 percent, Siegel said.

Siegel said U.S. equities had a run for their money in the mid-70s when Treasury yields were trading at eye-popping double-digit levels.

"Today, there is none of that with where government bonds are trading," he said, speaking at the semi-annual conference of Focus Financial Partners, a network of independent wealth management firms with about $28 billion in assets under management.

Siegel should know: His book, "Stocks for the Long Run," now in its fourth edition, made an argument five years ago that investors should consider ramping up their exposure to international equities.